The relationship between a manufacturer and its remarketer is not always characterised by harmonious accord, especially, it appears, when the manufacturer in question happens to be IBM. As reported a few days ago (CI No 1,320), IBM has decided to change its terms for resellers of its AS/400 machines in the US as from the […]
The relationship between a manufacturer and its remarketer is not always characterised by harmonious accord, especially, it appears, when the manufacturer in question happens to be IBM. As reported a few days ago (CI No 1,320), IBM has decided to change its terms for resellers of its AS/400 machines in the US as from the start of next year, with the effect that one such reseller, Hinsdale, Illinois-based XL/Datacomp Inc, announced that revenues and earnings would be seriously affected by the move. It emerges that a major part of this new strategy is substantially to reduce the discounts offered by IBM to resellers as part of what XL/Datacomp’s vice-president of sales Mike La Forte perhaps diplomatically describes as an attempt by IBM to make sure the business partner with the best solution, not the best price, wins out. The size of the discount reductions themselves was put at 50% by Charles Mittlehouse at XL/Datacomp’s London base, although La Forte insisted that while they were substantial, they were not as bad as that. Nonetheless, as La Forte admitted, the net result of this will be that as XL/Datacomp intends to maintain its existing profit margin, it will have to put its prices up, and that will lead to reduced sales – hence the announcement last week. Meanwhile Mittlehouse pointed out that the new strategy would not similarly affect XL/Datacomp in the UK, because over here it is a distributor for IBM, not a remarketer – in fact, one possible outcome could be that XL/Datacomp UK in Slough benefits from the situation, since the prices of agents and remarketers, with whom it competes, will be going up. However, it seems that IBM is adamant that any benefits incurred by XL/Datacomp in the UK will not be at IBM UK’s expense, for Mittlehouse was on hand again to confirm that IBM has banned XL/Datacomp entry from the supposedly open IBM ’90 exhibition to scheduled for the National Exhibition Centre in Birmingham next spring (CI No 1,324). The reason, according to Mittlehouse, is that IBM is getting worried about the reputation XL/Datacomp has for providing faster delivery and better service to its clients. This all means that it appears IBM has managed to upset one of its business partners on both sides of the Atlantic. In the UK, XL/Datacomp is saying that it considers the ban from IBM ’90 ridiculous, and in the US, La Forte said that XL/Datacomp’s future direction would possibly involve some diversification away from the IBM product line. IBM confirmed that XL/Datacomp would not be invited to participate in IBM 90 and refused to comment on the alteration in AS/400 reseller terms.